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Suppose two firms, Allstom from France, and Bombardier from Canada, are bidding on a contract to replace train cars for the subway system in Mexico City. If they bid the same amount, they share the contract, otherwise, the low bid wins. The figure below shows the payoff matrix for this contest. Bombardier (B) B bids $60 million B bids $40 million A bids $60 million Profit to A: $12 m Profit to B: $12 m Profit to A: $0 m Profit to B: $6 m Allstom (A) ... A bids $40 million Profit to A: $6 m Profit to B: $0 m Profit to A: $3 m Profit to B: $3 m O A. each firm bids $40 million, and earns profit of $3 million. O B. each firm bids $60 million, and earns profit of $12 million. O C. Bombardier bids $40 million, and earns profit of $6 million, while Allstom bids $60 million and earns profit of $0. O D. Bombardier bids $60 million, and earns profit of $0, while Allstom bids $40 million and earns profit of $6 million.

Suppose two firms, Allstom from France, and Bombardier from Canada, are bidding on a contract to replace train cars for the subway system in Mexico City. If they bid the same amount, they share the contract, otherwise, the low bid wins. The figure below shows the payoff matrix for this contest. Bombardier (B) B bids $60 million B bids $40 million A bids $60 million Profit to A: $12 m Profit to B: $12 m Profit to A: $0 m Profit to B: $6 m Allstom (A) ... A bids $40 million Profit to A: $6 m Profit to B: $0 m Profit to A: $3 m Profit to B: $3 m O A. each firm bids $40 million, and earns profit of $3 million. O B. each firm bids $60 million, and earns profit of $12 million. O C. Bombardier bids $40 million, and earns profit of $6 million, while Allstom bids $60 million and earns profit of $0. O D. Bombardier bids $60 million, and earns profit of $0, while Allstom bids $40 million and earns profit of $6 million.

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter8: Game Theory
Section: Chapter Questions
Problem 8.9P
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Suppose two firms, Allstom from France, and Bombardier from Canada, are bidding on a contract to replace train cars for the subway system in Mexico City. If they bid the same amount, they share the contract, otherwise, the low bid wins. The figure below shows the payoff matrix for this contest. Bombardier (B) B bids $60 million B bids $40 million A bids $60 million Profit to A: $12 m Profit to B: $12 m Profit to A: $0 m Profit to B: $6 m Allstom (A) C A bids $40 million Profit to A: $6 m Profit to B: $0 m Profit to A: $3 m Profit to B: $3 m O A. each firm bids $40 million, and earns profit of $3 million. B. each firm bids $60 million, and earns profit of $12 million. O C. Bombardier bids $40 million, and earns profit of $6 million, while Allstom bids $60 million and earns profit of $0. O D. Bombardier bids $60 million, and earns profit of $0, while Allstom bids $40 million and earns profit of $6 million.
Transcribed Image Text:Suppose two firms, Allstom from France, and Bombardier from Canada, are bidding on a contract to replace train cars for the subway system in Mexico City. If they bid the same amount, they share the contract, otherwise, the low bid wins. The figure below shows the payoff matrix for this contest. Bombardier (B) B bids $60 million B bids $40 million A bids $60 million Profit to A: $12 m Profit to B: $12 m Profit to A: $0 m Profit to B: $6 m Allstom (A) C A bids $40 million Profit to A: $6 m Profit to B: $0 m Profit to A: $3 m Profit to B: $3 m O A. each firm bids $40 million, and earns profit of $3 million. B. each firm bids $60 million, and earns profit of $12 million. O C. Bombardier bids $40 million, and earns profit of $6 million, while Allstom bids $60 million and earns profit of $0. O D. Bombardier bids $60 million, and earns profit of $0, while Allstom bids $40 million and earns profit of $6 million.
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